how can I set up terrain for a building site?
That’s sort of an open ended question. The terrain is typically depicted by contour lines which represent various vertical distances at specific intervals. It would be necessary to define your site boundary on the horizontal plane. In SketchUp (SU), this is the red-green axis. Assuming your concern is with a real parcel of land, depending on your location, there are resources available to provide topographic data which could be imported into your SU model. You may use a survey or USGS data for example. Once your elevations are established, it is a simple process when working in SketchUp to move the contours to their appropriate heights.
If more information is needed, a search resulted in many SU examples…CLICK THIS
That is to say, elevation data can often be obtained from a USGS-based contour map. Once in SU, the contour lines are transformed into actual modeled hills and valleys using the Sandbox tools.